Despite Premium Increases P-C Surplus Drops
NU Online News Service, Aug. 26, 4:14 p.m. EDT?The property-casualty insurance industry's stock market losses drove its surplus down by $4.4 billion or 1.5 percent in 2002, the Insurance Services Office Inc. reported.
The surplus decline to $285.2 billion from $289.6 in 2001 came even as insurers written premium growth spiked up by 14.1 percent–the biggest increase since 1986.
Net investment income declined 2.8 percent and overall capital losses almost doubled to $21.7 billion from $11.4 billion in 2001.
Jersey City, N.J.-based ISO's data was contained in its 78-page study, "Insurer Financial Results: 2002," which analyzes insurer insolvencies, matches reinsurers' results against those of the insurance industry overall, and examines results by line of business.
It also examines mergers, acquisitions and market concentration; performance of insurance stocks; and industry cash flow.
The study, ISO said, includes information about impacts from environmental and asbestos issues and catastrophes on industry results.
Long-term analyses in the study examine expense ratios and ratio of premium to surplus and loss reserves to surplus, the interaction of capital gains and surplus change.
The study found that declines were recorded even as investors paid $17.3 billion in new funds, which ISO said was a record.
An increase in loss and adjustment expenses for the industry, the study found, was reduced to 2.6 percent from 15.3 percent in 2001.
ISO said that net income after taxes was at $2.9 billion compared with a $7 billion 2001 loss.
The firm also reported the industry's generally accepted accounting procedures rate of return was at 2.2 percent from negative 1.2 percent in 2001.
Net losses on underwriting were reduced to $30.5 billion compared with 2001′s record $52.6 billion. Overall operating cash flow rose to $37.8 billion last year from $15.4 billion, the study found.
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